If Left to Market Forces,activities That Produce External Benefits Will

question 45

True/False

If left to market forces,activities that produce external benefits will be overproduced.

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Definitions:

Variable Cost

Costs that change in proportion to the level of goods or services that a business produces.

Variable Costing

A pricing approach that incorporates only variable production expenses—such as direct materials, direct labor, and variable manufacturing overhead—into the cost of products.

Absorption Costing

A costing method that assigns all manufacturing costs, both fixed and variable, to products.

Net Income

The total earnings of a company after subtracting all expenses from revenue.